01 Apr Federal & State Tax Relief due to COVID-19
Right now, you should be focused on your health and well-being as well as your family’s. Please know we are working tirelessly to make sure you stay informed during this very eventful and confusing time. Our hope is that timely and factual news can support smart decisions on the tax and financial front, and in turn, reduce a measure of anxiety. The IRS has stated that you do not need to prove you were negatively impacted by the pandemic to qualify for any of these relief programs. States may vary in their approach, but most are following suit.
Federal Tax Relief – the IRS People First Initiative
The IRS has provided significant relief in the form of filing extensions, dispute resolution and deferring payment on installment loans.
Treasury Secretary Mnuchin announced in a press conference that taxpayers will receive the following relief:
- For individuals owing tax, you may defer up to $1,000,000 of tax payments, interest and penalty free for 90 days.
- Businesses and corporations may defer up to $10,000,000 of tax payments, interest and penalty free for 90 days.
If you owe tax, you can file in the normal course and you will be automatically exonerated from penalties and interest up to July 15, 2020. You may still extend your tax return, of course, but if you think you can pay within that time frame of 90 days, you have nothing to lose by filing.
If you previously owed money to the IRS and entered into a payment arrangement, you are allowed to not make payments until July 15, 2020. If this applies to you, see a more complete explanation by clicking on this link: IRS Newsroom
If you owe taxes from prior years, now may be a good time to file Offers in Compromise to reduce the amounts owed in your favor.
California Tax Relief
In mid-March, Governor Newsom issued an Executive Order granting special tax relief for California taxpayers impacted by the COVID-19 pandemic. This means you will have extra time to file and pay your California taxes.
This relief includes moving the various tax filing and payment deadlines:
- Partnerships and LLCs who are taxed as partnerships whose tax returns are due on March 15 now have a 90-day extension to file and pay by June 15.
- Individual filers whose tax returns are due on April 15 now have a 90-day extension to file and pay by July 15.
- Quarterly estimated tax payments due on April 15 now have a 90-day extension to pay by July 15.
Finally, FTB will also waive interest and any late filing or late payment penalties that would other wise apply.
Other States
If you have filing obligations in other states besides California, we will do our best to make sure you comply, but it is logical to expect similar measures from other states. Please check in with us or go to the website for the particular state.